| Convertible Redeemable Preferred Shares | 18 CONVERTIBLE REDEEMABLE PREFERRED SHARES
On November 30, 2011, pursuant to a share purchase agreement,
the Company issued 166,666,700 convertible redeemable Series A
preferred shares at a price of US$0.02 per share for a total amount
of US$3,333 to convertible redeemable Series A preferred shares
investors. The convertible redeemable Series A preferred shares has
a par value of US$0.00001 each.
On November 30, 2011, pursuant to a share transfer agreement,
Votion Limited, which was controlled by the founders of the
Company, transferred a total of 26,666,700 ordinary shares to
convertible redeemable Series A preferred shares holders at a price
of US$0.045 per share for a total amount of US$1,200. These
26,666,700 ordinary shares were surrendered by the holder and then
cancelled by the Company. Simultaneously, the Company issued the
equal number of convertible redeemable Series A preferred shares to
the purchasers.
On January 19, 2012, pursuant to a share purchase agreement,
the Company issued 148,000,000 convertible redeemable Series B
preferred shares at a price of US$0.078 per share for a total
amount of US$11,550 to convertible redeemable Series B preferred
shares investors. The convertible redeemable Series B preferred
shares has a par value of US$0.00001 each.
On January 19, 2012, pursuant to a share transfer agreement,
convertible redeemable Series A preferred shares investors
transferred a total of 4,180,200 convertible redeemable Series A
preferred shares to Votion Limited at a price of US$0.003 per share
for a total amount of US$13. These 4,180,200 convertible redeemable
Series A preferred shares were surrendered by the holder and then
cancelled by the Company. Simultaneously, the Company issued the
equal number of ordinary shares to Votion Limited.
On September 24, 2012, pursuant to a share purchase agreement,
the Company issued 116,285,700 convertible redeemable Series
B-1 B-1 B-1
On January 24, 2013, pursuant to a share purchase agreement,
the Company issued 24,226,200 convertible redeemable Series
B-2 B-2 B-2
On May 16, 2014, pursuant to a share purchase agreement, the
Company issued 208,661,292 convertible redeemable Series C
preferred shares at a price of US$0.6134 per share for a total
amount of US$128,000. The convertible redeemable Series C preferred
shares has a par value of US$0.00001 each.
On May 30, 2014, pursuant to a share purchase agreement, the
Company issued 81,508,317 convertible redeemable Series C preferred
shares at a price of US$0.6134 per share for a total amount of
US$50,000. The convertible redeemable Series C preferred shares has
a par value of US$0.00001 each.
On October 30, 2015, pursuant to a share purchase agreement,
the Company issued 103,646,131 convertible redeemable Series D
preferred shares at a price of US$0.9648 per share for a total
amount of US$100,000. The convertible redeemable Series D preferred
shares has a par value of US$0.00001 each.
On January 30, 2016, pursuant to a share purchase agreement,
the Company issued 103,646,132 convertible redeemable Series D
preferred shares at a price of US$0.9648 per share for a total
amount of US$100,000. The convertible redeemable Series D preferred
shares has a par value of US$0.00001 each.
On February 3, 2016, pursuant to a share purchase agreement,
each existing convertible redeemable Series D preferred share
was re-designated C-1 re-designated B-1 B-2 re-designated A-7 B-1 re-designated A-7 re-designated A-4 re-designated A-2
On February 3, 2016, pursuant to a share purchase agreement,
the Company issued 117,662,806 Class A Ordinary Shares,
91,289,618 convertible redeemable Series A-1 A-3 A-5 A-6 B-2
On February 3, 2016, pursuant to a share purchase agreement,
the Company modified the original issuance price of convertible
redeemable Series C-1
On February 3, 2016, pursuant to a share purchase agreement,
the Company issued 111,899,688 convertible redeemable Series
C-2 C-2
On June 3, 2016, pursuant to a share purchase agreement, the
Company issued 29,446,407 convertible redeemable Series
C-3 C-3
On July 18, 2018, pursuant to a share purchase agreement, the
Company issued 157,047,506 convertible redeemable Series
C-3
The convertible redeemable Series A-1, A-2, A-3, A-4, A-5, A-6 A-7 B-1 B-2 C-1, C-2 C-3
The Group’s Preferred Shares activities for the year ended
March 31, 2017 is summarized below:
Balance as of Issuance of Accretion on Balance as of
Series A-1 Preferred Shares (US$0.00001 of par value per share;
91,289,618 shares authorized, issued and outstanding as of
March 31, 2017 with redemption value of RMB15,116 as of
December 31, 2018)
Number of shares 91,289,618 —
—
91,289,618
Amount 207,287 —
—
207,287
Series A-2 Preferred Shares (US$0.00001 of par value per share;
189,153,200 shares authorized, issued and outstanding as of
March 31, 2017 with redemption value of RMB42,684 as of
December 31, 2018)
Number of shares 189,153,200 —
—
189,153,200
Amount 36,415 —
1,990 38,405
Series A-3 Preferred Shares (US$0.00001 of par value per share;
95,898,640 shares authorized, issued and outstanding as of
March 31, 2017 with redemption value of RMB83,389 as of
December 31, 2018)
Number of shares 95,898,640 —
—
95,898,640
Amount 221,137 —
—
221,137
Series A-4 Preferred Shares (US$0.00001 of par value per share;
148,000,000 shares authorized, issued and outstanding as of
March 31, 2017 with redemption value of RMB125,531 as of
December 31, 2018)
Number of shares 148,000,000 —
—
148,000,000
Amount 108,078 —
6,047 114,125
Series A-5 Preferred Shares (US$0.00001 of par value per share;
43,262,547 shares authorized, issued and outstanding as of
March 31, 2017 with redemption value of RMB137,703 as of
December 31, 2018)
Number of shares 43,262,547 —
—
43,262,547
Amount 112,418 —
8,608 121,026
Series A-6 Preferred Shares (US$0.00001 of par value per share;
117,192,207 shares authorized, issued and outstanding as of
March 31, 2017 with redemption value of RMB504,349 as of
December 31, 2018)
Number of shares 117,192,207 —
—
117,192,207
Amount 331,516 —
54,645 386,161
Series A-7 Preferred Shares (US$0.00001 of par value per share;
140,511,900 shares authorized, issued and outstanding as of
March 31, 2017 with redemption value of RMB299,461 as of
December 31, 2018)
Number of shares 140,511,900 —
—
140,511,900
Amount 254,369 —
15,547 269,916
Series B-1 Preferred Shares (US$0.00001 of par value per share;
290,169,609 shares authorized, issued and outstanding as of
March 31, 2017 with redemption value of RMB1,574,841 as of
December 31, 2018)
Number of shares 290,169,609 —
—
290,169,609
Amount 1,306,962 —
91,684 1,398,646
Series B-2 Preferred Shares (US$0.00001 of par value per share;
194,572,067 shares authorized, issued and outstanding as of
March 31, 2017 with redemption value of RMB1,906,021 as of
December 31, 2018)
Number of shares 194,572,067 —
—
194,572,067
Amount 1,127,682 —
237,135 1,364,817
Series C-1 Preferred Shares (US$0.00001 of par value per share;
215,946,767 shares authorized, issued and outstanding as of
March 31, 2017 with redemption value of RMB1,626,607 as of
December 31, 2018)
Number of shares 215,946,767 —
—
215,946,767
Amount 1,301,866 —
109,805 1,411,671
Series C-2 Preferred Shares (US$0.00001 of par value per share;
111,899,688 shares authorized, issued and outstanding as of
March 31, 2017 with redemption value of RMB937,315 as of
December 31, 2018)
Number of shares 111,899,688 —
—
111,899,688
Amount 754,603 —
61,906 816,509
Series C-3 Preferred Shares (US$0.00001 of par value per share;
98,154,692 shares authorized, 29,446,407 shares issued and
outstanding as of March 31, 2017 with redemption value of
RMB241,361 as of December 31, 2018)
Number of shares —
29,446,407 —
29,446,407
Amount —
192,142 14,535 206,677
Total number of Preferred Shares 1,637,896,243 29,446,407 —
1,667,342,650
Total amount of Preferred Shares 5,762,333 192,142 601,902 6,556,377
The Group’s Preferred Shares activities for the year ended
March 31, 2018 is summarized below:
Balance as of Accretion on Balance as of
Series A-1 Preferred Shares (US$0.00001 of par value per share;
91,289,618 shares authorized, issued and outstanding as of
March 31, 2018 with redemption value of RMB15,116 as of
December 31, 2018)
Number of shares 91,289,618
— 91,289,618
Amount 207,287
— 207,287
Series A-2 Preferred Shares (US$0.00001 of par value per share;
189,153,200 shares authorized, issued and outstanding as of
March 31, 2018 with redemption value of RMB42,684 as of
December 31, 2018)
Number of shares 189,153,200
— 189,153,200
Amount 38,405 2,098 40,503
Series A-3 Preferred Shares (US$0.00001 of par value per share;
95,898,640 shares authorized, issued and outstanding as of
March 31, 2018 with redemption value of RMB83,389 as of
December 31, 2018)
Number of shares 95,898,640
— 95,898,640
Amount 221,137
— 221,137
Series A-4 Preferred Shares (US$0.00001 of par value per share;
148,000,000 shares authorized, issued and outstanding as of
March 31, 2018 with redemption value of RMB125,531 as of
December 31, 2018)
Number of shares 148,000,000
— 148,000,000
Amount 114,125 6,384 120,509
Series A-5 Preferred Shares (US$0.00001 of par value per share;
43,262,547 shares authorized, issued and outstanding as of
March 31, 2018 with redemption value of RMB137,703 as of
December 31, 2018)
Number of shares 43,262,547
— 43,262,547
Amount 121,026 9,266 130,292
Series A-6 Preferred Shares (US$0.00001 of par value per share;
117,192,207 shares authorized, issued and outstanding as of
March 31, 2018 with redemption value of RMB504,349 as of
December 31, 2018)
Number of shares 117,192,207
— 117,192,207
Amount 386,161 63,653 449,814
Series A-7 Preferred Shares (US$0.00001 of par value per share;
140,511,900 shares authorized, issued and outstanding as of
March 31, 2018 with redemption value of RMB299,461 as of
December 31, 2018)
Number of shares 140,511,900
— 140,511,900
Amount 269,916 16,504 286,420
Series B-1 Preferred Shares (US$0.00001 of par value per share;
290,169,609 shares authorized, issued and outstanding as of
March 31, 2018 with redemption value of RMB1,574,841 as of
December 31, 2018)
Number of shares 290,169,609
— 290,169,609
Amount 1,398,646 98,116 1,496,762
Series B-2 Preferred Shares (US$0.00001 of par value per share;
194,572,067 shares authorized, issued and outstanding as of
March 31, 2018 with redemption value of RMB1,906,021 as of
December 31, 2018)
Number of shares 194,572,067
— 194,572,067
Amount 1,364,817 287,000 1,651,817
Series C-1 Preferred Shares (US$0.00001 of par value per share;
215,946,767 shares authorized, issued and outstanding as of
March 31, 2018 with redemption value of RMB1,626,607 as of
December 31, 2018)
Number of shares 215,946,767
— 215,946,767
Amount 1,411,671 119,076 1,530,747
Series C-2 Preferred Shares (US$0.00001 of par value per share;
111,899,688 shares authorized, issued and outstanding as of
March 31, 2018 with redemption value of RMB937,315 as of
December 31, 2018)
Number of shares 111,899,688
— 111,899,688
Amount 816,509 66,985 883,494
Series C-3 Preferred Shares (US$0.00001 of par value per share;
98,154,692 shares authorized, 29,446,407 shares issued and
outstanding as of March 31, 2018 with redemption value of
RMB241,361 as of December 31, 2018)
Number of shares 29,446,407
— 29,446,407
Amount 206,677 19,158 225,835
Total number of Preferred Shares 1,667,342,650
— 1,667,342,650
Total amount of Preferred Shares 6,556,377 688,240 7,244,617
The Group’s Preferred Shares activities for the year ended
March 31, 2019 is summarized below:
Balance as of March 31, 2018 Accretion on convertible redeemable preferred shares to redemption value
Issuance of convertible redeemable Series C-3 preferred shares, net of issuance costs
Conversion to Balance as of March 31, 2019
Series A-1
Number of shares 91,289,618
—
— (91,289,618 )
—
Amount 207,287
—
— (207,287 )
—
Series A-2
Number of shares 189,153,200
—
— (189,153,200 )
—
Amount 40,503 1,833
— (42,336 )
—
Series A-3
Number of shares 95,898,640
—
— (95,898,640 )
—
Amount 221,137
—
— (221,137 )
—
Series A-4
Number of shares 148,000,000
—
— (148,000,000 )
—
Amount 120,509 5,481
— (125,990 )
—
Series A-5
Number of shares 43,262,547
—
— (43,262,547 )
—
Amount 130,292 7,066
— (137,358 )
—
Series A-6
Number of shares 117,192,207
—
— (117,192,207 )
—
Amount 449,814 40,619
— (490,433 )
—
Series A-7
Number of shares 140,511,900
—
— (140,511,900 )
—
Amount 286,420 13,655
— (300,075 )
—
Series B-1
Number of shares 290,169,609
—
— (290,169,609 )
—
Amount 1,496,762 76,993
— (1,573,755 )
—
Series B-2
Number of shares 194,572,067
—
— (194,572,067 )
—
Amount 1,651,817 178,820
— (1,830,637 )
—
Series C-1
Number of shares 215,946,767
—
— (215,946,767 )
—
Amount 1,530,747 87,788
— (1,618,535 )
—
Series C-2
Number of shares 111,899,688
—
— (111,899,688 )
—
Amount 883,494 49,943
— (933,437 )
—
Series C-3
Number of shares 29,446,407
— 157,047,506 (186,493,913 )
—
Amount 225,835 47,706 1,069,753 (1,343,294 )
—
Total number of Preferred Shares 1,667,342,650
— 157,047,506 (1,824,390,156 )
—
Total amount of Preferred Shares 7,244,617 509,904 1,069,753 (8,824,274 )
—
As discussed in Note 3, in December 2018, immediately prior to the
completion of the Company’s initial public offering, all of
the Preferred Shares were converted to Class A Ordinary Shares
based on the aforementioned conversion price. Prior to their
conversion, the Preferred Shares were entitled to certain
privileges over ordinary shares with respects to conversion,
redemption, dividends and liquidation. The key terms of the
Preferred Shares are as follows:
Conversion right
Each holder of Preferred Shares shall be entitled to convert any or
all of its Preferred Shares at any time, into such number of fully
paid Class A Ordinary Shares at corresponding Preferred
Shares’ original purchase price (original conversion price),
which is subject to adjustment for diluting issuances.
Each Preferred Share shall be converted automatically into the
number of fully paid Class A Ordinary Share
(i) immediately upon the closing of a qualified public
offering or (ii) the written consent of holders of at least a
majority of the outstanding Preferred Shares in the same
sub-series
Redemption right
If (A) the Company fails to complete a qualified public
offering on or prior to December 31, 2018, (B) Mr. Chen
Qi (i) resigns or is removed from the Company or any other
Group Companies; or (ii) directly or indirectly participates
(other than as a non-executive N
On July 18, 2018, the Company amended its Memorandum of
Articles of Association to extend the first possible redemption
date of the Preferred Shares from December 31, 2018 to
December 31, 2019.
Liquidation right
In the event of any liquidation, dissolution, winding up or deemed
liquidation of the Company, either voluntary or involuntary, after
satisfaction of all creditors’ claims and claims that may be
preferred by law, prior and in preference to any distribution of
any of the assets or surplus funds of the Company to the holders of
ordinary shares by reason of their ownership of such shares, a
holder of Preferred Shares shall be entitled to receive, in respect
of each Preferred Share held by it and on a pari passu basis with
any other Preferred Shares, the liquidation preference amount of
such Preferred Share. Upon liquidation, Series C Preferred Shares
shall rank senior to Series B Preferred Shares, Series B Preferred
Shares shall rank senior to Series A Preferred Shares and Series A
Preferred Shares shall rank senior to ordinary shares.
The “Liquidation Preference Amount” of a convertible
redeemable preferred share shall mean an amount equal to IP ×
(1.08) N
Dividend right
(a)
The Series C Preferred Shares shall be entitled to
receive non-cumulative
(b)
The Series B Preferred Shares shall be entitled to
receive non-cumulative
(c)
The Series A Preferred Shares shall be entitled to
receive non-cumulative
(d)
In the event the Company shall declare a distribution
other than in cash, the holders of Preferred Shares shall be
entitled to a proportionate share of any such distribution as
though the holders of Preferred Shares were holders of the number
of Ordinary Shares into which their Preferred Shares are
convertible as of the record date fixed for the determination of
the holders of Ordinary Shares entitled to receive such
distribution.
Voting rights
The holder of any Preferred Shares shall be entitled to the number
of votes equal to the number of Class A Ordinary Shares into
which such Preferred Share could be converted at the record date
for determination of the members entitled to vote on such
matters.
Before IPO, the Company has classified the Preferred Shares in the
mezzanine equity on the Consolidated Balance Sheets as they are
contingently redeemable at the options of the holders. In
addition, the Company records accretions on the Preferred Shares to
the redemption value from the issuance dates to the earliest
redemption dates, i.e. December 31, 2018. The accretions are
recorded against additional paid-in paid-in
The Company determined that there were no embedded derivatives
requiring bifurcation as the economic characteristics and risks of
the embedded conversion and redemption features are clearly and
closely related to that of the Preferred Shares. The Preferred
Shares are not readily convertible into cash as there is not a
market mechanism in place for trading of the Company’s
shares.
The Company has determined that there was no beneficial conversion
feature attributable to any of the preferred shares because the
initial effective conversion prices of these preferred shares were
higher than the fair value of the Company’s common shares
determined by the Company with the assistance from an independent
valuation firm.
The Company assesses whether an amendment to the terms of its
Preferred Shares is an extinguishment or a modification using the
fair value model. When Preferred Shares are extinguished, the
difference between the fair value of the consideration transferred
to the holders of Preferred Shares and the carrying amount of
Preferred Shares (net of issuance costs) is treated as deemed
dividend to the holders of Preferred Shares. The Company considers
that a significant change in fair value after the change of the
terms to be substantive and thus triggers extinguishment. A change
in fair value which is not significant immediately after the change
of the terms is considered non-substantive
Modifications
Modifications of Preferred Shares that result in transfers of value
between holders of Preferred Shares and ordinary shareholders are
accounted by analogizing to the guidance in ASC 718 for
modification of share compensation arrangements classified as
equity. Any changes in value resulting from the modification is
recognized as effective dividend to (from) holders of Preferred
Shares and is included in earnings available to ordinary
shareholders in both basic and diluted EPS calculation. For the
year ended March 31, 2018, there was no modification of
Preferred Shares.
On July 18, 2018, the Company amended its Memorandum of
Articles of Association to extend the first possible redemption
date of the Preferred Shares from December 31, 2018 to
December 31, 2019. The amendment to the first possible
redemption date of the Preferred Shares was accounted for as
modification as the fair values of these Shares immediately after
the amendment was not significantly different from their fair
values immediately before the amendment. The Company accounted for
the modification that resulted in a transfer of value from ordinary
shareholders to holders of mezzanine equity of RMB89,076 as deemed
dividend to holders of mezzanine equity. The impact on the
accretion of the Preferred Shares to redemption value is accounted
for prospectively. |
